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VCs reject team picked to probe financial crisis in universities

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Graduands following the proceedings during Kenya Methodist University’s 19th graduation ceremony in Meru on October 12, 2019. [Olivia Murithi, Standard]

Vice-chancellors have questioned a move by the Ministry of Education to set up a team to investigate financial challenges facing their institutions, terming it a waste of time.
The VCs argue that the problems facing institutions of higher learning have over the years been adequately deliberated by stakeholders, documented and suggestions made on way forward.
The VCs say their last meeting in Mombasa, which was attended by officials from the National Treasury and Ministry of Education, and MPs drew solid action plans, complete with timelines for implementation.
The stakeholders met in Mombasa from February 4-7 where they discussed issues related to sustainable funding of university education, research, science, technology and innovation, policy on placement and role of accreditation bodies.
However, two months later, State Department for University Education Principal Secretary Simon Nabukwesi appointed a ‘think tank’ to help in developing a new framework that would provide sustainable solutions to the permanent phenomenon.’
The 11-member team is led by Prof Egara Kabaji, former Deputy Vice-Chancellor at Masinde Muliro University of Science and Technology (Mmust).
Nabukwesi wants the team, to within 30 days, determine the debt burden of the universities and how it morphed into the present levels.
The team will also categorise universities in terms of debt burdens and develop a framework for stabilising the institutions.

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 Prof Egara Kabaji (R) during the launch of the 2014 Burt Award for African Literature winning books, February 16, 2015. 

Additionally, the team will provide a framework for the sourcing of funds outside the Exchequer support and provide practical steps for operationalisation.
VCs who spoke to The Saturday Standard underlined that terms of reference for the team contains matters already discussed and solutions proposed and that there exists a Universities Funding Board (UFB), whose mandate is well explained under Section 53 of the Universities Act on resource mobilisation and allocation of funds to institutions.
The VCs said the meeting identified funding as the greatest challenge universities face and drew a 14-point action plan, which will help them overcome the cash crunch.
Waste of time
“All these issues, which the think-tank are being told to do are known. It’s a waste of resources given that high-level meetings have been held to discuss these matters and suggestions put forth,” said a VC in one of the top public universities.
The VCs regretted that the new team will not come up with different findings, contrary to what they discussed in Mombasa, on universities funding challenges.
“They will state the same things using different English terms but the issues affecting universities are known. Let the government just implement the various road maps that have been agreed upon,” said another VC.
National Assembly Education Committee chairperson Florence Mutua said terms of reference set for the think-tank had been covered during the Mombasa meeting.
“We agree that the only task force that was to be set up was to find out how the debts reached that high and how institutions can use appropriations in aid to plug their deficits,” said Mutua.
According to the meeting’s recommendations, a multi-sectoral technical team was to be set up by June this year, to guide holistic reforms in the university sector.
In his presentation during the meeting, PS Nabukwesi admitted there are challenges facing universities and explained 12-key points that would make higher education sustainable.

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Amb. Simon Nabukwesi, PS University Education and Research. [Wilberforce Okwiri, Standard]

Among the top recommendations is a review of universities appropriations in aid projection due to declining enrollment for module II programmes, and to encourage cost reduction, increase efficiency and effective use of available staff.
He also proposed an increase in Differentiated Unit Cost (DUC) to 80 per cent, translating to about Sh73.91 billion to cater for increase from the current Sh41.907 billion, which is only 53 per cent for public universities and Sh2.4 billion (18 per cent) for private universities.
He also proposed building capacity for universities on resource mobilisation to attract funding and set up a special fund to bail out institutions, service pending bills and provide adequate resources.
VCs said after the stakeholders meeting, the next phase in addressing the funding problem was how to implement the proposals.
“You can clearly see that the PS already knows the issues to be addressed. We do not need another team to diagnose our problems,” said another VC.
Overall, the resolutions made by the stakeholders during the Mombasa meeting reveals solid action plans for sustainable funding solutions complete with timelines.
The stakeholders resolved that to address the declining government funding to university education and research, re-allocation of resources within the sector be done immediately to match the growth in funding level in sectors.
A new policy to guide universities on borrowing whenever there is need for Cabinet consideration was agreed to be developed by June this year.
The meeting also agreed to review the contribution of household fees after robust consultations with all the stakeholders within the 2021/23 financial year.
It was also resolved that there be established resource mobilisation strategies by June, to include developing policy to guide universities on borrowing and financing models for assets.  
Many other recommendations were made on full implantation of the Differentiated Cost Unit (DUC) and to eliminate large disparity between public and private universities.

Professor Geoffrey Muluvi (second left) shows off the Kebs standardization certificate that approving the manufacture of hand sanitisers. [Philip Muasya, Standard]

On pending bills, the meeting agreed that by June this year, a Cabinet Memo paper be prepared to waive statutory payments to Kenya Revenue Authority (KRA).
Meeting also agreed on provision of conditional grants to support universities to clear outstanding debts such as pension, Sacco, NHIF and other service providers. This is to be done by June.
Data presented by the VCs to the National Assembly show that public universities are experiencing unprecedented financial constraints including accrued statutory payments to Kenya Revenue Authority (KRA), pension scheme dues, insurance premiums, Sacco contributions, NHIF and NSSF.
Debt level
Prof Geoffrey Muluvi, vice chancellors’ committee chairperson, said the universities bosses revealed that the total amount owed to these institutions by September last year was Sh37.3 billion most of which were due to KRA.
On pensions, VCs report says that since 2010-2013 CBA, universities have been unable to remit about Sh3 billion.
Far-reaching proposals were also made on universities low funding for development projects. An agreement was reached on a framework for development of idle assets and resourcing and mobilisation to provide services and income through public-private partnerships.
A framework is to be developed for the disposal of idle assets and another one for transferring idle assets to other universities wherever the need arises. 
Other areas with strong recommendations by the stakeholders were on bloated or unbalanced workforce, weak data management and rapid expansion of universities, which have led to resources being spread thinly.
Inadequate student financing from Higher Education Loans Board, inadequate commercialisation of research and intellectual property and streamline policy on placement of government-sponsored students in universities and
A review of multiple charges paid by universities to professional/regulatory bodies and development of a policy on online and blended learning were also strong areas of action plans with suggested timelines.

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Sordid tale of the bank ‘that would bribe God’

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Bank of Credit and Commerce International. August 1991. [File, Standard]

“This bank would bribe God.” These words of a former employee of the disgraced Bank of Credit and Commerce International (BCCI) sum up one of the most rotten global financial institutions.
BCCI pitched itself as a top bank for the Third World, but its spectacular collapse would reveal a web of transnational corruption and a playground for dictators, drug lords and terrorists.
It was one of the largest banks cutting across 69 countries and its aftermath would cause despair to innocent depositors, including Kenyans.
BCCI, which had $20 billion (Sh2.1 trillion in today’s exchange rate) assets globally, was revealed to have lost more than its entire capital.
The bank was founded in 1972 by the crafty Pakistani banker Agha Hasan Abedi.
He was loved in his homeland for his charitable acts but would go on to break every rule known to God and man.
In 1991, the Bank of England (BoE) froze its assets, citing large-scale fraud running for several years. This would see the bank cease operations in multiple countries. The Luxembourg-based BCCI was 77 per cent owned by the Gulf Emirate of Abu Dhabi.  
BoE investigations had unearthed laundering of drugs money, terrorism financing and the bank boasted of having high-profile customers such as Panama’s former strongman Manual Noriega as customers.
The Standard, quoting “highly placed” sources reported that Abu Dhabi ruler Sheikh Zayed Sultan would act as guarantor to protect the savings of Kenyan depositors.
The bank had five branches countrywide and panic had gripped depositors on the state of their money.
Central Bank of Kenya (CBK) would then move to appoint a manager to oversee the operations of the BCCI operations in Kenya.
It sent statements assuring depositors that their money was safe.
The Standard reported that the Sheikh would be approaching the Kenyan and other regional subsidiaries of the bank to urge them to maintain operations and assure them of his personal support.
It was said that contact between CBK and Abu Dhabi was “likely.”
This came as the British Ambassador to the UAE Graham Burton implored the gulf state to help compensate Britons, and the Indian government also took similar steps.
The collapse of BCCI was, however, not expect to badly hit the Kenyan banking system. This was during the sleazy 1990s when Kenya’s banking system was badly tested. It was the era of high graft and “political banks,” where the institutions fraudulently lent to firms belonging or connected to politicians, who were sometimes also shareholders.
And even though the impact was expected to be minimal, it was projected that a significant number of depositors would transfer funds from Asian and Arab banks to other local institutions.
“Confidence in Arab banking has taken a serious knock,” the “highly placed” source told The Standard.
BCCI didn’t go down without a fight. It accused the British government of a conspiracy to bring down the Pakistani-run bank.  The Sheikh was said to be furious and would later engage in a protracted legal battle with the British.
“It looks to us like a Western plot to eliminate a successful Muslim-run Third World Bank. We know that it often acted unethically. But that is no excuse for putting it out of business, especially as the Sultan of Abu Dhabi had agreed to a restructuring plan,” said a spokesperson for British Asians.
A CBK statement signed by then-Deputy Governor Wanjohi Murithi said it was keenly monitoring affairs of the mother bank and would go to lengths to protect Kenyan depositors.
“In this respect, the CBK has sought and obtained the assurance of the branch’s management that the interests of depositors are not put at risk by the difficulties facing the parent company and that the bank will meet any withdrawal instructions by depositors in the normal course of business,” said Mr Murithi.
CBK added that it had maintained surveillance of the local branch and was satisfied with its solvency and liquidity.
This was meant to stop Kenyans from making panic withdrawals.
For instance, armed policemen would be deployed at the bank’s Nairobi branch on Koinange Street after the bank had announced it would shut its Kenyan operations.
In Britain, thousands of businesses owned by British Asians were on the verge of financial ruin following the closure of BCCI.
Their firms held almost half of the 120,000 bank accounts registered with BCCI in Britain. 
The African Development Bank was also not spared from this mess, with the bulk of its funds deposited and BCCI and stood to lose every coin.
Criminal culture
In Britain, local authorities from Scotland to the Channel Islands are said to have lost over £100 million (Sh15.2 billion in today’s exchange rate).
The biggest puzzle remained how BCCI was allowed by BoE and other monetary regulation authorities globally to reach such levels of fraudulence.
This was despite the bank being under tight watch owing to the conviction of some of its executives on narcotics laundering charges in the US.
Coast politician, the late Shariff Nassir, would claim that five primary schools in Mombasa lost nearly Sh1 million and appealed to then Education Minister George Saitoti to help recover the savings. Then BoE Governor Robin Leigh-Pemberton condemned it as so deeply immersed in fraud that rescue or recovery – at least in Britain – was out of the question.
“The culture of the bank is criminal,” he said. The bank was revealed to have targeted the Third World and had created several “institutional devices” to promote its operations in developing countries.
These included the Third World Foundation for Social and Economic Studies, a British-registered charity.
“It allowed it to cultivate high-level contacts among international statesmen,” reported The Observer, a British newspaper.
BCCI also arranged an annual Third World lecture and a Third World prize endowment fund of about $10 million (Sh1 billion in today’s exchange rate).
Winners of the annual prize had included Nelson Mandela (1985), sir Bob Geldof (1986) and Archbishop Desmond Tutu (1989).
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Monitor water pumps remotely via your phone

Tracking and monitoring motor vehicles is not new to Kenyans. Competition to install affordable tracking devices is fierce but essential for fleet managers who receive reports online and track vehicles from the comfort of their desk.

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Agricultural Development Corporation Chief Accountant Gerald Karuga on the Spot Over Fraud –

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Gerald Karuga, the acting chief accountant at the Agricultural Development Corporation (ADC), is on the spot over fraud in land dealings.

ADC was established in 1965 through an Act of Parliament Cap 346 to facilitate the land transfer programme from European settlers to locals after Kenya gained independence.

Karuga is under fire for allegedly aiding a former powerful permanent secretary in the KANU era Benjamin Kipkulei to deprive ADC beneficiaries of their land in Naivasha.

Kahawa Tungu understands that the aggrieved parties continue to protest the injustice and are now asking the Ethics and Anti-corruption Commission (EACC) and the Directorate of Criminal Investigations (DCI) to probe Karuga.

A source who spoke to Weekly Citizen publication revealed that Managing Director Mohammed Dulle is also involved in the mess at ADC.

Read: Ministry of Agriculture Apologizes After Sending Out Tweets Portraying the President in bad light

Dulle is accused of sidelining a section of staffers in the parastatal.

The sources at ADC intimated that Karuga has been placed strategically at ADC to safeguard interests of many people who acquired the corporations’ land as “donations” from former President Daniel Arap Moi.

Despite working at ADC for many years Karuga has never been transferred, a trend that has raised eyebrows.

“Karuga has worked here for more than 30 years and unlike other senior officers in other parastatals who are transferred after promotion or moved to different ministries, for him, he has stuck here for all these years and we highly suspect that he is aiding people who were dished out with big chunks of land belonging to the corporation in different parts of the country,” said the source.

In the case of Karuga safeguarding Kipkulei’s interests, workers at the parastatals and the victims who claim to have lost their land in Naivasha revealed that during the Moi regime some senior officials used dubious means to register people as beneficiaries of land without their knowledge and later on colluded with rogue land officials at the Ministry of Lands to acquire title deeds in their names instead of those of the benefactors.

Read Also: Galana Kulalu Irrigation Scheme To Undergo Viability Test Before Being Privatised

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“We have information that Karuga has benefitted much from Kipkulei through helping him and this can be proved by the fact that since the matter of the Naivasha land began, he has been seen changing and buying high-end vehicles that many people of his rank in government can’t afford to buy or maintain,” the source added.

“He is even building a big apartment for rent in Ruiru town.”

The wealthy officer is valued at over Sh1.5 billion in prime properties and real estate.

Last month, more than 100 squatters caused scenes in Naivasha after raiding a private firm owned by Kipkulei.

The squatters, who claimed to have lived on the land for more than 40 years, were protesting take over of the land by a private developer who had allegedly bought the land from the former PS.

They pulled down a three-kilometre fence that the private developed had erected.

The squatters claimed that the former PS had not informed them that he had sold the land and that the developer was spraying harmful chemicals on the grass affecting their livestock and homes built on a section of the land.

Read Also: DP Ruto Wants NCPB And Other Agricultural Bodies Merged For Efficiency

Naivasha Deputy County Commissioner Kisilu Mutua later issued a statement warning the squatters against encroaching on Kipkuleir’s land.

“They are illegally invading private land. We shall not allow the rule of the jungle to take root,” warned Mutua.

Meanwhile, a parliamentary committee recently demanded to know identities of 10 faceless people who grabbed 30,350 acres of land belonging to the parastatal, exposing the rot at the corporation.

ADC Chairman Nick Salat, who doubles up as the KANU party Secretary-General, denied knowledge of the individuals and has asked DCI to probe the matter.

Email your news TIPS to [email protected] or WhatsApp +254708677607. You can also find us on Telegram through www.t.me/kahawatungu

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William Ruto eyes Raila Odinga Nyanza backyard

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Deputy President William Ruto will next month take his ‘hustler nation’ campaigns to his main rival, ODM leader Raila Odinga’s Nyanza backyard, in an escalation of the 2022 General Election competition.

Acrimonious fall-out

Development agenda

Won’t bear fruit

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